Walmart probable investment in Flipkart sets to spike its valuation by 2X to $20 Bn

World’s largest offline retailer Walmart is looking for a big bet on Indian e-commerce major Flipkart. The US-based company is already in talks with the Bengaluru-based firm for a stake around 15-20 per cent.

Now, it is eyeing a bigger stake in the e-commerce firm at a massive valuation of about $20 billion, which claims to be almost double from its last fundraising event. Flipkart raised staggering $2.6 billion from SoftBank at $10 billion valuation.

The rivalry between Indian arm of US-based e-commerce Amazon Indian and Flipkart has attracted many foreign investors such as SoftBank, Alibaba, and Tencent. Walmart hasn’t placed any bet in one of the fastest growing e-commerce markets yet and is eyeing to grab a major slice of Flipkart.

The aforementioned valuation can’t be considered as double as the latest buyout of shares in Flipkart, Tiger Global had reportedly diluted its 2.2 per cent stake for about $424 million. During the secondary buyout, Flipkart valued in the range of $17-19 billion.

As per earlier data, Flipkart valuation was at $11.6 billion in April 2017.

In August last year, Flipkart closed the deal with SoftBank, which bought the stake worth at least $2.6 billion. Post pouring in a massive round, SoftBank owns about 21 per cent of Kalyan Krishnamurthy-led company.

Meanwhile, Tiger Global, one of the major backers of Flipkart, witnessed its shareholding reduced from 33.6 per cent to 20.5 per cent.

According to TOI report, Walmart may buy out Flipkart’s numerous early shareholders to take on common rival Amazon to some extent. If the deal goes through, Walmart could invest $5-10 billion in Flipkart, making it one of the largest cross-border deals in India, it added.

Recently, Flipkart had reported a higher loss of 68 per cent in FY 2016-17 at Rs 8,771.4 crore.

The loss posted by Flipkart did not stop it expanding its operations and investment in India and abroad. Earlier, this month, the firm had put in Rs 1632.81 crore ($257.3 million) into its logistics arm eKart, which is registered as InstaKart.

The company is also looking for startups in Silicon Valley to bring in differentiation in its focus area, which includes Artificial Intelligence (AI) and Machine Learning (ML)

Doubling down its investment in its seller’s arm, Amazon had infused Rs 1,950 crore into Amazon Seller Services to maintain its supremacy over local players in India.

Last month, Amazon India claimed that it did twice the order processed by Flipkart during recently concluded ‘Great India Sale’ (held during January 21-24). However, Flipkart stated that it has maintained the leadership position with 60-65 market share during ‘Republic Day Sale’.

Walmart has been building anti-Amazon alliances to counter it in every possible manner. It will be interesting to see how its infusion in Flipkart helps to fight the heavyweight Amazon.